Didi Kuaidi, Uber's rival in China, raises $2 billion from investors

Uber drivers surround a private car and block the traffic on the Guangzhou Avenue in June. In China, ride-hailing startup Didi Kuaidi is rivaling Uber, with the on-demand transportation company announcing Wednesday it has raised $2 billion from investors. (Islet Liang/ColorChinaPhoto / AP)

The on-demand transportation race is heating up in China with Chinese ride-hailing startup Didi Kuaidi announcing Wednesday it has raised $2 billion from investors.

The privately held company, which has the largest market share of on-demand transportation apps in China and is Uber's largest competitor in the region, said the fundraising lifts its cash reserves to $3.5 billion. The company did not disclose its full list of investors, but those made public include Capital International Private Equity Fund and Ping An Ventures. They join existing investors such as Alibaba and Tencent.

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The company said in a statement that the funds will be used to build new services, finance research in data analytics and improve the customer experience.

While the company did not address how the funds might be used to fend off competition from the likes of Uber, there is little doubt that the Chinese ride-hailing giant will invest in widening its lead over the San Francisco company.

"What I want to emphasize is, we have $3.5 billion in hand," Didi Kuaidi President Jean Liu told the New York Times. "We can be disciplined and at the same time flexible in terms of how we enlarge the market."

Didi Kuaidi's latest funding round comes shortly after Uber's chief executive, Travis Kalanick, said in a letter to investors the company was committing $1 billion to its expansion in China.